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Securities
 6 Months Ended
Jun. 30, 2016
Securities [Abstract]  
Securities
Note 3 – Securities

Securities are classified into held-to-maturity and available-for-sale categories.  Held-to-maturity (HTM) securities are those that CTBI has the positive intent and ability to hold to maturity and are reported at amortized cost.  Available-for-sale (AFS) securities are those that CTBI may decide to sell if needed for liquidity, asset-liability management or other reasons.  Available-for-sale securities are reported at fair value, with unrealized gains or losses included as a separate component of equity, net of tax.

The amortized cost and fair value of securities at June 30, 2016 are summarized as follows:

Available-for-Sale

(in thousands)
 
Amortized Cost
  
Gross Unrealized Gains
  
Gross Unrealized Losses
  
Fair Value
 
U.S. Treasury and government agencies
 
$
219,193
  
$
1,694
  
$
(26
)
 
$
220,861
 
State and political subdivisions
  
117,611
   
5,377
   
(41
)
  
122,947
 
U.S. government sponsored agency mortgage-backed securities
  
207,696
   
2,823
   
(471
)
  
210,048
 
Total debt securities
  
544,500
   
9,894
   
(538
)
  
553,856
 
CRA investment funds
  
25,000
   
358
   
(99
)
  
25,259
 
Total available-for-sale securities
 
$
569,500
  
$
10,252
  
$
(637
)
 
$
579,115
 

Held-to-Maturity

(in thousands)
 
Amortized Cost
  
Gross Unrealized Gains
  
Gross Unrealized Losses
  
Fair Value
 
U.S. Treasury and government agencies
 
$
480
  
$
0
  
$
0
  
$
480
 
State and political subdivisions
  
1,181
   
1
   
0
   
1,182
 
Total held-to-maturity securities
 
$
1,661
  
$
1
  
$
0
  
$
1,662
 

The amortized cost and fair value of securities at December 31, 2015 are summarized as follows:

Available-for-Sale

(in thousands)
 
Amortized Cost
  
Gross Unrealized Gains
  
Gross Unrealized Losses
  
Fair Value
 
U.S. Treasury and government agencies
 
$
240,434
  
$
311
  
$
(1,351
)
 
$
239,394
 
State and political subdivisions
  
125,665
   
3,707
   
(157
)
  
129,215
 
U.S. government sponsored agency mortgage-backed securities
  
202,282
   
1,564
   
(2,270
)
  
201,576
 
Total debt securities
  
568,381
   
5,582
   
(3,778
)
  
570,185
 
CRA investment funds
  
25,000
   
132
   
(381
)
  
24,751
 
Total available-for-sale securities
 
$
593,381
  
$
5,714
  
$
(4,159
)
 
$
594,936
 

Held-to-Maturity

(in thousands)
 
Amortized Cost
  
Gross Unrealized Gains
  
Gross Unrealized Losses
  
Fair Value
 
U.S. Treasury and government agencies
 
$
480
  
$
0
  
$
(12
)
 
$
468
 
State and political subdivisions
  
1,181
   
2
   
0
   
1,183
 
Total held-to-maturity securities
 
$
1,661
  
$
2
  
$
(12
)
 
$
1,651
 

The amortized cost and fair value of securities at June 30, 2016 by contractual maturity are shown below.  Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

  
Available-for-Sale
  
Held-to-Maturity
 
(in thousands)
 
Amortized Cost
  
Fair Value
  
Amortized Cost
  
Fair Value
 
Due in one year or less
 
$
74,264
  
$
74,387
  
$
0
  
$
0
 
Due after one through five years
  
152,755
   
154,945
   
1,181
   
1,182
 
Due after five through ten years
  
67,396
   
70,228
   
480
   
480
 
Due after ten years
  
42,389
   
44,248
   
0
   
0
 
U.S. government sponsored agency mortgage-backed securities
  
207,696
   
210,048
   
0
   
0
 
Total debt securities
  
544,500
   
553,856
   
1,661
   
1,662
 
CRA investment funds
  
25,000
   
25,259
   
0
   
0
 
Total securities
 
$
569,500
  
$
579,115
  
$
1,661
  
$
1,662
 

During the three months ended June 30, 2016, there was a net loss of $4 thousand on calls of AFS securities, consisting of a pre-tax gain of $1 thousand and a pre-tax loss of $5 thousand.  During the three months ended June 30, 2015, there was a net loss of $14 thousand on sales and calls of AFS securities, consisting of a pre-tax gain of $605 thousand and a pre-tax loss of $619 thousand.

During the six months ended June 30, 2016, there was a combined gain of $64 thousand on sales and calls of AFS securities, consisting of a pre-tax gain of $69 thousand and a pre-tax loss of $5 thousand.  During the six months ended June 30, 2015, there was a combined gain of $130 thousand on sales and calls of AFS securities, consisting of a pre-tax gain of $828 thousand and a pre-tax loss of $698 thousand.

The amortized cost of securities pledged as collateral, to secure public deposits and for other purposes, was $183.4 million at June 30, 2016 and $228.2 million at December 31, 2015.

The amortized cost of securities sold under agreements to repurchase amounted to $289.6 million at June 30, 2016 and $285.5 million at December 31, 2015.

CTBI evaluates its investment portfolio on a quarterly basis for impairment.  The analysis performed as of June 30, 2016 indicates that all impairment is considered temporary, market and interest rate driven, and not credit-related.  The percentage of total investments with unrealized losses as of June 30, 2016 was 11.9% compared to 61.1% as of December 31, 2015.  The following tables provide the amortized cost, gross unrealized losses, and fair market value, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position as of June 30, 2016 that are not deemed to be other-than-temporarily impaired.

Available-for-Sale

(in thousands)
 
Amortized Cost
  
Gross Unrealized Losses
  
Fair Value
 
Less Than 12 Months
         
U.S. Treasury and government agencies
 
$
0
  
$
0
  
$
0
 
State and political subdivisions
  
3,090
   
(34
)
  
3,056
 
U.S. government sponsored agency mortgage-backed securities
  
5,831
   
(18
)
  
5,813
 
Total debt securities
  
8,921
   
(52
)
  
8,869
 
CRA investment funds
  
0
   
0
   
0
 
Total <12 months temporarily impaired AFS securities
  
8,921
   
(52
)
  
8,869
 
             
12 Months or More
            
U.S. Treasury and government agencies
  
21,999
   
(26
)
  
21,973
 
State and political subdivisions
  
754
   
(7
)
  
747
 
U.S. government sponsored agency mortgage-backed securities
  
33,333
   
(453
)
  
32,880
 
Total debt securities
  
56,086
   
(486
)
  
55,600
 
CRA investment funds
  
5,000
   
(99
)
  
4,901
 
Total ≥12 months temporarily impaired AFS securities
  
61,086
   
(585
)
  
60,501
 
             
Total
            
U.S. Treasury and government agencies
  
21,999
   
(26
)
  
21,973
 
State and political subdivisions
  
3,844
   
(41
)
  
3,803
 
U.S. government sponsored agency mortgage-backed securities
  
39,164
   
(471
)
  
38,693
 
Total debt securities
  
65,007
   
(538
)
  
64,469
 
CRA investment funds
  
5,000
   
(99
)
  
4,901
 
Total temporarily impaired AFS securities
 
$
70,007
  
$
(637
)
 
$
69,370
 

The following tables provide the amortized cost, gross unrealized losses, and fair market value, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position as of December 31, 2015 that are not deemed to be other-than-temporarily impaired.  The analysis performed as of December 31, 2015 indicated that all impairment was considered temporary, market and interest rate driven, and not credit-related.
 
Available-for-Sale

(in thousands)
 
Amortized Cost
  
Gross Unrealized Losses
  
Fair Value
 
Less Than 12 Months
         
U.S. Treasury and government agencies
 
$
142,147
  
$
(487
)
 
$
141,660
 
State and political subdivisions
  
11,190
   
(106
)
  
11,084
 
U.S. government sponsored agency mortgage-backed securities
  
92,009
   
(899
)
  
91,110
 
Total debt securities
  
245,346
   
(1,492
)
  
243,854
 
CRA investment funds
  
10,000
   
(183
)
  
9,817
 
Total <12 months temporarily impaired AFS securities
  
255,346
   
(1,675
)
  
253,671
 
             
12 Months or More
            
U.S. Treasury and government agencies
  
54,773
   
(864
)
  
53,909
 
State and political subdivisions
  
3,187
   
(51
)
  
3,136
 
U.S. government sponsored agency mortgage-backed securities
  
49,908
   
(1,371
)
  
48,537
 
Total debt securities
  
107,868
   
(2,286
)
  
105,582
 
CRA investment funds
  
5,000
   
(198
)
  
4,802
 
Total ≥12 months temporarily impaired AFS securities
  
112,868
   
(2,484
)
  
110,384
 
             
Total
            
U.S. Treasury and government agencies
  
196,920
   
(1,351
)
  
195,569
 
State and political subdivisions
  
14,377
   
(157
)
  
14,220
 
U.S. government sponsored agency mortgage-backed securities
  
141,917
   
(2,270
)
  
139,647
 
Total debt securities
  
353,214
   
(3,778
)
  
349,436
 
CRA investment funds
  
15,000
   
(381
)
  
14,619
 
Total temporarily impaired AFS securities
 
$
368,214
  
$
(4,159
)
 
$
364,055
 

Held-to-Maturity

(in thousands)
 
Amortized Cost
  
Gross Unrealized Losses
  
Fair Value
 
12 Months or More
         
U.S. Treasury and government agencies
 
$
480
  
$
(12
)
 
$
468
 
Total temporarily impaired HTM securities
 
$
480
  
$
(12
)
 
$
468
 

U.S. Treasury and Government Agencies

The unrealized losses in U.S. Treasury and government agencies were caused by interest rate increases.  The contractual terms of those investments do not permit the issuer to settle the securities at a price less than amortized cost.  CTBI does not consider those investments to be other-than-temporarily impaired at June 30, 2016, because CTBI does not intend to sell the investments and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost, which may be at maturity.

State and Political Subdivisions

The unrealized losses in securities of state and political subdivisions were caused by interest rate increases.  The contractual terms of those investments do not permit the issuer to settle the securities at a price less than amortized cost.  CTBI does not consider those investments to be other-than-temporarily impaired at June 30, 2016, because CTBI does not intend to sell the investments before recovery of their amortized cost, which may be at maturity.
U.S. Government Sponsored Agency Mortgage-Backed Securities

The unrealized losses in U.S. government sponsored agency mortgage-backed securities were caused by interest rate increases.  CTBI expects to recover the amortized cost basis over the term of the securities.  CTBI does not consider those investments to be other-than-temporarily impaired at June 30, 2016, because (i) the decline in market value is attributable to changes in interest rates and not credit quality, (ii) CTBI does not intend to sell the investments, and (iii) it is not more likely than not we will be required to sell the investments before recovery of their amortized cost, which may be at maturity.

CRA Investment Funds

CTBI’s CRA investment funds consist of investments in fixed income mutual funds ($25.3 million of the total fair value and $0.1 million of the total unrealized losses in common stock investments).  The severity of the impairment (fair value is approximately 0.4% less than cost) and the duration of the impairment correlates with the decline in long-term interest rates in 2016.  CTBI evaluated the near-term prospects of these funds in relation to the severity and duration of the impairment.  Based on that evaluation, CTBI does not consider those investments to be other-than-temporarily impaired at June 30, 2016.